Rethinking shared devices

More than a decade after the inception of shared services – whereby an independent business services group provides human resources, payroll, finance and other support services to business units – many practitioners say they’re still not sure whether it makes sense to bring IT operations under that umbrella.

That’s partly because shared-services groups are supposed to produce cost savings by consolidating disparate support units into a single entity, and it’s not always clear “how much more bang for the buck you get through consolidating the IT organization,” said Stacy Brandom, senior vice-president at J.P. Morgan Chase in New York.

Indeed, shared-services practitioners remain split as to whether it’s in their best interest to include their IT organizations directly in a shared-services outfit or to simply align IT activities with the efforts of the group.

One thing is certain – some organizations that have established shared-services groups have had trouble generating new efficiencies after their initial cost savings. That’s why Swiss Re America Holding Co., an Armonk, N.Y.-based reinsurance company that set up a shared-services group four years ago, folded the infrastructure side of its IT organization into its shared-services group.

Still, for many shared-services practitioners, the role of the IT organizations remains a constant sticking point. “If you centralize operations too much, you give up too much control,” said Nathan E. Cagle, vice-president of human resources at Union, N.J.-based NUI Corp.